Despite a mountain of historical experience suggesting otherwise, Republican leaders have insisted that their proposed tax cuts will somehow pay for themselves by letting loose a torrent of economic growth. Paul Ryan. Mitch McConnell. Steve Mnuchin. They’ve all offered up some version of that line, even as independent think tanks on the moderate-left, center, and right have concluded that it simply isn’t true.
Today, Congress’s in-house team of tax wonks, the Joint Committee on Taxation, finally produced its own macro-economic analysis of the Senate tax bill. Lo and behold, it also concludes that the cuts Republicans want won’t pay for themselves. The committee forecasts that the bill, filled with tax cuts for corporations and the wealthy, would boost the country’s gross domestic product by less than a percentage point, while adding more than $1 trillion to the deficit.
Republicans have already started pushing back. The members of the Senate Finance Committee complained simultaneously that the bill is still being revised, so it’s unfair to analyze it’s impact, and that other economists have predicted it will have a much bigger effect on growth. But the specific nitpicks don’t matter. The GOP will ignore the score, because the GOP does not care about evidence. Congress’s budget score-keepers have been saying for well over a decade that tax cuts don’t cover their own costs, and most Republicans have kept repeating the same old fantasies.
What should the rest of us make of this? I’m generally not one to get excited about deficits. I don’t think the national debt is an existential threat to the U.S., and adding a trillion to it here or there is not going to make or break the economy. It’s true that the deficits associated with this bill could lead to automatic spending cuts, which would hit vulnerable Americans hardest, if Congress doesn’t intervene. But the reason I fundamentally find the legislation appalling is that it’s a regressive transfer of wealth from the Treasury to America’s richest households that will further concentrate money and therefore political and economic power among the red state rich guys who make up the GOP’s donor class, while likely creating a bizarre, inefficient IRS code that will inspire baroque efforts at tax avoidance. (See the bill’s cuts for passthrough businesses, aka the Kansas Disaster: Volume II). Beyond all that, it will be a tax hike on many millions of middle class families and could make it harder for progressive states to increase taxes to pay for social services. There’s a lot to hate about this legislation apart from its impact on the debt.
So why harp on the Republicans’ obviously ludicrous, repeatedly debunked claims about magically, self-funding tax cuts? Because they represent the mendacity of their whole sales pitch. Decades after pretty much every honest economist and policy expert realized that we’re on the left-hand side of the Laffer curve, conservatives are still promising supply-side miracles that will never come. When the growth they’re predicting fails to materialize, the rest of us will have the small consolation of saying, “I told you so.”